How does what you have and what you want affect happiness?

The old saw is true: “What you have makes you happy. What you want makes you unhappy.”:

A specially designed household survey for rural China is used to analyse the determinants of aspirations for income, proxied by reported minimum income need, and the determinants of subjective well-being, both satisfaction with life and satisfaction with income. It is found that aspiration income is a positive function of actual income and reference income, and that subjective well-being is raised by actual income but lowered by aspiration income. These findings suggests the existence of a partial hedonic treadmill, and can help to explain why subjective well-being in China appears not to have risen despite rapid economic growth.

Source: “Income, Aspirations and the Hedonic Treadmill in a Poor Society” from University of Oxford, Department of Economics, Economics Series Working Papers #468.

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